Doğan taps into N. Iraq resources

Hurriyet Daily News with wires

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Growing Turkish interest in Iraq’s energy resources has spurred another takeover, as Doğan Holding announced it has invested in two project companies formed to find and extract oil in the country.

According to a Doğan filing with the Istanbul Stock Exchange yesterday, Doğan Enerji, the energy arm of the group, acquired 50 percent of the shares of two different companies formed to locate and extract oil in northern Iraq’s Arbil and Khalakan regions.

The filing came a day before the Iraqi government received offers from the world’s top oil companies to develop oil and natural gas fields. Companies including Exxon Mobil and Royal Dutch Shell are looking for the rights to develop six oil fields and two gas deposits in the country.

"Other shareholders at the project companies are institutional investors from Switzerland and the United Arab Emirates," Anatolia news agency quoted the Doğan Holding statement as saying.

The partnership licenses for Doğan Enerji last for two decades. The field in the Arbil area is projected to start pump oil next year, while a test-drill will be set up at the Khanakan field next year. Doğan Enerji will invest $80 million in the two fields over the next two years.

Energy renaissance

Doğan’s statement follows a move by the autonomous Kurdish Regional Government to export crude oil for the first time on June 1. Exports from the Taq Taq field were managed by Swiss oil producer Addax and Genel Enerji, a Turkish firm, while exports from Tawke field were made by DNO International and Genel.

Barely a week after exports started, Britain’s Heritage Oil announced it was merging with Genel Enerji, a subsidiary of Çukurova Group, for $2.45 billion, forming a $5.5 billion company named HeritaGE. The new firm aims to develop Taq Taq, Tawke and Miran fields in northern Iraq and transfer the oil to international markets via the Kirkuk-Ceyhan pipeline, according to a Genel Enerji statement June 9.

"While not of the size of the Heritage-Genel transaction, [Doğan’s move] demonstrates the attractiveness of acquiring stakes in energy assets or energy firms focused in northern Iraq," Bobby Sarkar, vice president of Equity Research at Dubai-based Al Mal Capital, told Hürriyet Daily News & Economic Review yesterday. "The region possesses significant untapped ... reserves, which could be harnessed to not only meet local demand but used for substantial export-driven income."

After the Heritage-Genel deal, Sarkar predicted the region would see similar acquisitions.

Last week, China Petrochemical Corp., known as Sinopec, offered $7.3 billion to buy Addax. Shares of DNO International in Oslo also started climbing, on expectations that the firm will receive a similar offer. Since May 1, DNO gained nearly 25 percent.

Doğan shares spiked yesterday, rising 11.6 percent to 1.06 Turkish Liras.

"This is a solid development in the energy business," Bloomberg quoted Önder Zorba, an analyst at Ata Invest, as saying. "The project has the potential to provide vertical integration and it’s parallel to Doğan’s growth strategy."



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